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Get the foundation you need in risk adjustment to optimize your documentation workflow.

What is risk adjustment? It is a statistical process that is applied to healthcare to account for expected patient expenditures — the money allocated based on the health profile of the patient. But figuring out which rules — ICD-10 guidelines, Medicare guidelines, Coding Clinic guidelines — take priority when documenting or coding an encounter can be confusing.

This process adjusts the “payments for that healthcare plan based on the status of their enrollment base,” explained Jacob Swartzwelder, CPC, CIC, CPMA, CRC, CEMC, in his AAPC HEALTHCON Regional 2024 presentation “Navigating HCC Auditing in Primary Care: Strategies for Optimizing RAF Scores.”

“Risk adjustment is important because it’s going to ensure the fair allocation of the funds where money is being spent,” he said. The process is also important because it helps payers allocate money more effectively, rather than directing it where it may otherwise not be needed.

Recognize Quality of Care and Financial Implications

Each payer’s model is going to determine how they pursue the risk adjustment (and auditing) process.

Hierarchical Condition Categories (HCCs) are a risk adjustment model that predicts future healthcare costs by categorizing diagnosis codes from patient encounters.

Risk adjustment factor (RAF) is the numerical representation of the estimated cost of a patient’s healthcare over a year. This method considers diagnostic data from medical records, as well as demographics like residence, which can impact individual patients and can, across populations, also show larger regional trends.

When the data collection is accurate and the resulting RAF profile is accurate, too, then there’s a better chance of ensuring the patient can receive appropriate resources. “Like, ‘I see you have diabetic neuropathy. Do you have a bar in your shower so you don’t fall because you can’t feel your feet?’” Swartzwelder said. Accurate data can help prod such questions, and thus allocate resources more effectively.

Clinicians’ roles are obviously crucial for patient care, as well as the administrative aspects of healthcare, like documentation. But why should overburdened physicians feel compelled to put in the work necessary for health plans to establish accurate patient profiles, and, thus, RAF scores?

Swartzwelder pointed to patient health overall, and the fact that this kind of number crunching can provide more accurate and effective allocation of funds for patients, and thereby boost their healthcare resources and overall health — a particularly appealing sell for the primary care space, where clinicians aren’t focused on a single body system or condition.

Use Power of Assessments Through Specificity

Because RAFs are annual estimates, they need to be updated accordingly. Annual wellness visits or Medicare screenings are useful opportunities to check in on already diagnosed conditions, as well as screen for others, in some populations. Many of these visits involve several providers, from dieticians to pharmacists and beyond, which presents some compliance risks, Swartzwelder explained. “Who’s a doctor? Who’s signing? Who’s overseeing? Who’s co-signing this? We have approved providers for risk adjustment data capture; some of the people involved in an annual wellness visit do not meet that requirement, and it’s very important,” he said.

Important: This kind of record review can cause issues with coding, especially on the evaluation and management (E/M) side, as coders are trying to figure out how to calculate time. “We see this issue, maybe even more, on a problem visit side, where you’ve got that string of diagnoses being added in and it’s hard to tell which apply to the E/M level,” Swartzwelder explained.

Remember, there are a lot of administrative aspects of a patient encounter that happen in the background or after the patient leaves, and practices should build in a sort of internal risk adjustment review as they’re checking on the accuracy of the patient’s records — but it’s crucial to categorize that time as administrative, instead of part of the encounter.

“We often put a lot of pressure on short visits to have a lot of output. We want a 15-minute visit that is a problem visit to address chronic conditions and annual wellness visit, and a complete review — 20 conditions that have risk adjustment things,” Swartzwelder described, as an example of how it may not seem feasible to get all those diagnoses documented and to attend to the associated requirements for risk adjustment.

Swartzwelder encouraged clinical support folks to ask questions to get creative and innovative to solve this problem, from evaluating possible technology help such as an ambient artificial intelligence (AI) scribe to making sure staff responsible for scheduling understand the different kind of visits and can coordinate accordingly.

Another important aspect of coding accurately is making sure documentation is managed in a timely manner. “Personally, as an auditor, I call into question things that seem to have been added way after the encounter, or that a very specific detail is the only thing added on a different day,” he said. “And if your documentation has a question of purpose, you’re in risky territory.”

The risk adjustment process can be managed in a way that effectively allocates funds for patient care — but it can also be abused for increased HCC capture and to increase a patient’s RAF score in ways that are not material. And documentation that is “too good” or has additions two weeks after the visit may be cause for skepticism. Some visits, especially where screenings or tests are ordered or conducted, can make documentation more complicated, as multiple providers may be entering information into a record, which increases the potential for mistakes and other organizational risks. So, it’s important for an organization to think about these issues, anticipate situations that could be problematic, and use internal and external resources, like audits, to make sure their workflow and other process-level decisions are watertight.

Rachel Dorrell, MA, MS, CPC-A, CPPM, Development Editor, AAPC